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Italians Eying Far-Reaching Energy Deals in Tehran

Italian Prime Minister Matteo Renzi will lead a high-profile economic and energy delegation during his two-day visit to the Iranian capital Tehran on Tuesday.

The 250-strong Italian delegation includes representatives of oil, gas and petrochemical companies, which aim to pave the way for cooperation in the post-sanctions era, IRNA reported.

Representatives of two multinational oil and gas giants Eni and Saipem are also accompanying the premier.

Italy was Iran’s third largest trading partner and top European collaborator prior to the imposition of the US-engineered international sanctions against the Persian Gulf country’s trade and energy sectors.

According to Iran's Oil Minister Bijan Namdar Zanganeh, Italy's Eni is interested in buying 100,000 barrels of crude oil per day from Iran and its representatives are to discuss the contract in Tehran.

The potential agreement will probably be a one-year extendable contract.

However, he said, “I cannot now say anything about the volume or method of oil purchases, but I emphasize that Iran’s crude oil is desirable for Italian refiners.”

Zanganeh said Italian refiner Saras is also planning to buy 60,000-70,000 barrels.

Italians have expressed readiness to take over Phase 11 of South Pars Gas Field in Asalouyeh.

Eni has reportedly made a $4 billion proposal to develop the phase in a 36-month agreement. Iranian contractors were to initially implement the project, but none of them could reach a final agreement with the administration.

The Italian firm, which had participated in the first and second development phases of Darkhovein Oilfield in Khuzestan Province, is keen to undertake the third phase of the field that needs $1.3 billion in investment.

Darkhovein Oilfield was planned to produce 50,000 barrels in the first stage, which was materialized in 2004. The new phase will add 60,000-70,000 barrels to the output.

Tehran is sweetening the terms it offers on oil development contracts to draw the interest of foreign investors deterred by low crude prices.

The new contracts, which include those in the upstream exploration and development sectors, are expected to attract more than $40 billion in foreign investment. The other Italian oil contractor Saipem, whose 43% of shares belong to Eni, will sign a new memorandum of understanding during its representative's visit to Tehran, according to the company’s CEO.

“There are a multitude of opportunities in oil and services fields in Iran from offshore projects to exploitation and drilling, which should be first studied,” Stefano Cao added.

Saipem inked an MoU with Iran on the first day of Iranian President Hassan Rouhani’s official visit to Rome in January over cooperation in major oil and gas projects.

Saipem said the MoU with Iran had been signed with Parsian Oil and Gas Development Company and involved the revamping of Pars Shiraz and Tabriz refineries.

Earlier, a source close to the matter said the deal is worth $4-5 billion to build 2,000 km of pipeline in Iran.

An Italian government source said Iranians have signed deals worth up to €17 billion ($18.4 billion) in sectors from energy to infrastructure and from steel to shipbuilding.

Italy-based Maire Tecnimont, a leading engineering company, has signed an agreement worth €1 billion ($1.11 billion) with the Persian Gulf Petrochemical Industries Company in February to build refineries and petrochemical plants in Iran.

The agreement includes providing finance, parts and equipment as well as solutions to Iran's processing issues.

The final details of the agreement have yet to be announced.

In December 2015, a group of Italian companies visited South and North Pars Gas Fields, following which they expressed willingness to invest in the zone’s infrastructure, such as building a port, with investment proposals set to be explored in a joint commission in the near future.

They also made proposals for the development of North Pars, including Golshan and Ferdowsi fields.

Likewise, National Iranian Drilling Company recently signed an MoU with the subsidiaries of Eni on drilling both Iranian and foreign oil and gas wells. The agreement is due to be finalized after addressing executive hurdles.